THE RENT CRISIS IN NEW YORK CITY
THE RENT CRISIS THROUGH TIME:
Throughout the 1930s and 1940s, The Great Depression resulted in a wave of mortgage defaults and foreclosure. Due to this, rent controls were implemented through new federal programs to stabilize the housing market. New York's program, The New York City Housing Authority, was created in 1934 as the first public housing project in the nation. In 1935, governments were creating urban renewal plans and major infrastructure projects that removed tenements and built new housing in all five boroughs. Post-war, during the 1950s and 1960s, demand for housing exploded. This resulted in Federal Housing Administration (FDA) and Department of Veterans (VA) home ownership programs, as well as city and state programs.
These programs resulted in residents being drawn to new neighborhoods and a decline in tax base, along with highway buildings, relocation, and slum clearance, creating vacant and bright conditions in inner New York neighborhoods. During the 1960s, civic activists and war on poverty programs led movements towards the birth of community development corporations leading to a new cabinet-level Department of Housing and Urban Development in 1965.
At the beginning of the 1970s, the deteriorating socioeconomic conditions of the city led businesses to relocate out of New York City, resulting in the loss of tax revenues and reductions in municipal services. The combination of double digit oil prices with rent regulation and a lack of demand led to a widespread abandonment of multi family housing. In addition, neighborhoods were burned by arsonists and poor neighborhoods throughout the city were looted during the blackout of 1977. This ultimately led to the Fiscal Crisis of 1977, since the city lacked the revenue to pay expenses and lost their ability to borrow.
During the beginning of the 1980s, the city made an effort to increase their public revenues. The government initiated and enforced tax foreclosures on properties that were one year or more in tax arrears. Due to this new foreclosure, by the mid 1980s New York City became the largest landowners in the city, with title to more than 100,000 vacant and partly occupied apartments.
However, homelessness reached record levels during this time as well. This led the city to use private “welfare hotels” to house people experiencing homelessness and families. Mayor Koch, the mayor at the time, and the State Municipal Assistance Corporation/Financial Board began to stabilize the city budget by committing $4.2 billion in city and federal funds to rebuild entire neighborhoods during the first ten year plan for affordable housing (1986-1996). This allowed the Federal Government to expand the availability and use of Section 8 housing Choice Vouchers to shift from a supply-side to demand-side housing program strategies, while also introducing the Low-Income Housing Tax Credit Program.
Entering the early 1990s, federal, state and city resources were used extensively in order to address vacant and abandoned properties and housing needs of New York City. This led to an expansion in private investment in affordable housing in response to market demand, the sale of properties, the availability of subsidies, and regulatory changes under the Community Reinvestment Act that promoted private lending and investment in low-income housing and neighborhoods. Along with these new adjustments, administrations began extending the City's commitment to affordable housing while also cutting off any significant further additions to the city’s supply of housing by selling the property tax liens to private companies instead of taking ownership directly through tax foreclosures. City housing programs began to be designed, tested, and tweaked in order to respond to the needs of public, private, and not-for-profit sectors by implementing programs. Non-profits specializing in housing development and management grew, as did private developers.
However, as all of these programs began launching, city programs launched decades ago began to expire. By the early 2000s, Mayor Bloomberg committed to create and preserve an addition of 165,000 housing units. This led the city's ownership of vacant and occupied housing to fall to fewer than 1,000 units. Forcing governments to adapt to the boom and then to the bust market conditions of the decade, by designing programs with the idea to include affordable housing, and then design programs to address the consequence of foreclosure in the private housing market. Properties began to opt out of federal, state, and city housing programs.
Fast forward to today, New York City faces what is likely the worst housing affordability crisis in its history. According to Apartments.com, the current average rent for a one bedroom in New York city is $4023, or $3257 for a studio. That means that in order for an individual to live comfortably, spending no more than 30% of their income on housing, a renter would need to make $161,796 per year, which is about $13,483 per month. The minimum wage in New York City is only $2,315 per month, leaving a gap of $11,000. New York City needs major help. Increasing the supply of housing with zoning changes and incentivizing construction, alongside exploring solutions like rent stabilization and public housing initiatives are good places to start. The City needs our help, or it may go to a point of no return.